Eco-Innovation: When Sustainability And Competitiveness Shake Hands

The positive relationship between environmental sustainability, economic performance, and competitiveness is increasingly recognized by experts, yet the debate still continues. It is clear that technological development and institutional considerations play an important role in the transition of the economic system towards sustainability. In other words, technological change is a necessary, albeit insufficient, condition for achieving sustainability. Institutional changes, including changes in routines, social norms, formal regulations, and so on, are needed not only to induce the required technological changes, but also to encourage behavioural changes at all levels of society in more sustainable directions. The nature and scale of present-day environmental problems and the urgency for change has led to increasing application of the term “eco-innovation” in environmental management and policy. However, despite the promise of eco-innovations, the term is used in diverse contexts with different underlying connotations that diminish its practical value.

In my recent book, written with Pablo del Rio and Totti Könnölä, Eco-Innovation: When Sustainability and Competitiveness Shake Hands (Palgrave Macmillan, 2009) a framework of analysis is proposed to address the management and governance of eco-innovations and identify the specific characteristics of various eco-innovation processes.

In this research we understand innovation to be a systemic technological and social process which consists of an idea for change and its application in practice. Expanding on this, we define eco-innovation as innovation that improves environmental performance. Basically, innovation refers to a change in the way something is done. Hence, for the purpose of characterizing innovation – including eco-innovation – we must consider change as a useful starting point.

Fundamentally, different dimensions of change can be identified which, looked at together, explain factors of success or failure. Eco-innovation is most commonly related to technological change in production processes and products. In addition, eco-innovation can be a change in the behaviour of individual users or organizations or a strategic perspective to renew business. In practice, these dimensions are often intertwined, which is why we attempt to address them together in our book – an approach that has not been sufficiently considered before. Therefore, in this new book we develop a conceptual framework to characterise different kinds of eco-innovations and arrive at their respective implications alongside the traditional dichotomy between competitiveness and sustainability.

Although many potentially significant eco-innovations exist, many of them leading to competitive gains and social and environmental benefits, they are underused, and do not diffuse easily and quickly in the economy. Many factors (barriers and/or absence of drivers) contribute to this. The key question, then, is: why don’t firms develop eco-innovations or adopt those  developed by others? There is no easy answer since there is not one single factor at play, but rather several context-specific factors (country and sector) and their impact is felt at different levels (barriers to specific environmental technologies and more general obstacles), negatively affecting virtually all types of eco-innovation practices. Some barriers are common to general innovations, whereas others are specific to the environmental protection component which characterizes eco-innovations.

Eco-Innovation: When Sustainability and Competitiveness Shake Hands also aims to address and identify the barriers eco-innovation faces in both its development and application. In order to accomplish this, we provide a conceptual framework for the taxonomy of these various barriers, identifying instruments and combinations of instruments that will help mitigate its effect. This perspective is relevant given the fact that many promising eco-innovation initiatives face techno-institutional barriers. Overcoming such barriers requires a profound understanding of the existing established practices in both policy and management which hinder the breakthroughs of eco-innovation.
 
After analysing the drivers of and barriers to eco-innovation, we identify policy features and measures that can help remove those barriers (or encourage the drivers) and enhance the uptake of eco-innovations. In order to do so, we take into account the theoretical and empirical literature on environmentally sound techno-institutional change, as well as certain policies currently implemented in the EU, the US, and elsewhere. Furthermore, the book addresses the issue of what managers can do to take up eco-innovation in their corporate strategy. We answer this question by addressing the main dimensions on the conceptual framework that characterize different kinds of eco-innovations, from the point of view of corporate management. Thus, the framework offered in this research operates as a practical tool for eco-innovation management. Management can learn to understand the specific nature of each eco-innovation, set development priorities, and engage stakeholders crucial to success – as well as  identify required internal competences. The general corporate response to environmental challenge has been to improve management controls by implementating formalistic and procedural environmental management systems (EMS).

A variety of European and international environmental management standards were introduced throughout the 1990s and now more than 130,000 companies hold ISO 14001 certificates worldwide. Beyond these official registrations, many more companies – and other organisations including universities and public agencies – have implemented uncertified environmental management systems. Thus, EMS has become the pre-eminent approach to environmental management globally. EMS-driven incremental approaches to environmental management accounts for 70-90 percent of environmental technology expenditures, and have focused principally on waste management, energy use, and water consumption. In this book, we discuss environment management beyond the standardized EMS and explore ways the private sector can proactively differentiate between environmental management efforts and integrate eco-innovation into their corporate strategy.

Finally, Eco-Innovation: When Sustainability and Competitiveness Shake Hands provides and analyses through the proposed framework a set of detailed eco-innovation case studies that detail the positive impacts on a company’s competitiveness and sustainability. Eco-innovation can be a relevant tool for wiring up the innovation system and contributing to the renovation of that system, taking into account social, ecological and economic aspects of the development. The long-term survival of the economic system depends on its ability to create and maintain sustainable economic processes that do not involve short-term value creation at the expense of long-term wealth. By addressing both the process and outcome-oriented impacts of eco-innovation, we hope to demonstrate the wealth of ways in which eco-innovation processes can trigger economic and environmental improvements in their different dimensions. The case studies in this book show that diversity characterizes eco-innovation and plays a major role in the transition towards a more sustainable and competitive economy. We hope that the book help the reader to find their bearings among the wealth of approaches to eco-innovating and to identify the approach most suitable for a specific situation in hand.

If we wish to see eco-innovation making a difference, we must be brave. Bold visions need to be converted into feasible plans that help share risks and bring in different stakeholders to work together. This is one of the biggest, if not the biggest, challenge for ourselves and for our children.

[This research paper has been reproduced with permission of the authors, professors of IE Business School, Spain http://www.ie.edu/]